The impact of implementing productivity

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Reference no: EM131741722

Productivity The Director of Operations wants to know the impact of implementing productivity improving equipment in the shop. Currently on average it takes 20 hours to produce a unit at an average labor rate of $30 per hour. Material costs are $275 per unit and overhead costs are $15 per hour. A. Calculate the single productivity factor based on labor costs (labor cost per unit, labor cost per hour, units per labor dollar) and the multifactor productivity (cost per unit, cost per hour, units per dollar). B. The director believes that implementing automation in certain parts of the process will increase productivity. It is estimated the amount of time to produce a unit will decrease by 25%, labor rates will remain constant but overhead rates will increase by $10 per hour. Perform the same calculations as in A. C. Does automation increase productivity and by how much? (trick question) D. What are the estimated savings of implementing automation v. conventional manufacturing if the line produces 64 units in the month? E. Implementing automation requires building 66 units per month to ship 64. The scrap value of these 2 units is $125 eachand a new unit sells for $1468.75. What is the total productivity factor?

Reference no: EM131741722

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